Failure of IRS to Sign Consent to Extend Statute Before Statute Expiration Due to Government Shutdown Meant Statute Expired
The federal government shutdown this past winter apparently caused an extension of a statute agreed to by the taxpayer to be nevertheless invalid when the IRS did not also sign off on the extension prior to the expiration of statute due to the shutdown, the Chief Counsel’s office ruled in Email Advice ECC 201937017.[1]
The question presented in the email is relatively simple:
You asked us first whether, where the IRS did not timely sign a Form 872 Consent to Extend the Time to Assess Tax—due to a government shutdown at the time—but the taxpayer did sign the Consent, the consent is valid.[2]
The email concludes that the failure of the IRS to sign the Consent before the statute expired renders that Form 872 invalid:
The consent is invalid. The period of limitations to assess a tax may only be extended by consent “prior to the expiration” of the time to assess, and consent to extend “shall become effective when the agreement has been executed by both parties.” Treas. Reg. § 301.6501(c)-1(d). Here, the consent at issue was not executed by the IRS prior to the expiration of the period of limitations, at which point it can no longer be extended. That the failure to execute the extension was justified does not change this answer.[3]
Anticipating this answer, the questioner then asked the attorney to give his view on the validity of a power of attorney where a date range was mentioned, rather than listing the specific years, and where the POA did not explicitly grant the holder the right to sign a Consent. The question was presented as follows:
If it is invalid, you also asked whether a prior Consent signed by a Power of Attorney (POA) is valid when the POA (1) lists a date range that includes all years at issue but does not mention them explicitly, and (2) conveys only the boilerplate POA authorities and does not go beyond that to list authority to sign consents.[4]
The attorney found that while the IRS may not like accepting such a POA, the attorney’s view is that the POA is valid:
The prior Consent is valid for extending excise tax. (1) The POA gives a range of years that included all years at issue,and therefore the POA had authority to act on the taxpayers behalf for all years at issue. While the Internal Revenue Manual cautions against accepting POAs that grant general authority such as “all years,” I.R.M. 25.6.22.5.8.1(2)(a), in this case a specific range of years is specified, and that suffices. (2) The boilerplate POA form language explicitly grants the POA authority to sign “any agreements, consents, or similar documents” (emphasis added). This satisfies the Manual’s requirement that POAs be “specific in authorizing the representative to sign consents for the taxpayer.” I.R.M. 25.6.22.5.8.1(2)(b). Note:Because the POA only conveys authority to extend excise tax and not income tax, only excise tax was validly be extended by the Consent.[5]